[I sent the following memo to Armey
on January 12. As it really involves a GOP strategy for the congressional
session that is now about to begin, it may help to post it here as well. Armey
is one of my favorite members of Congress, by the way.]

On
"FoxNewsSunday," January 11, Mara Liasson asked you if you were not afraid to
oppose the President's proposal to expand Medicare coverage, because the polls
show it is very popular. I thought your answer was correct, that it may not be
so popular once people find out the details. Ms. Liasson also made the
observation that the Republicans were damaged politically in 1995 by opposing
Medicare. This is conventional wisdom in Washington, but I do not think it is
correct. The President and the Democrats believe they can spook you and Newt
and Trent and Republican backbenchers too. My years as a Big Government
Democrat taught me that Republicans can be snookered by allowing Democrats to
interpret electoral mandates. This is because the press corps will always help
in the interpretation. As long as Republicans believe they suffered in 1995
over the issue of tax cuts versus Medicare cuts they can be rolled on
child-care and Medicare this year, as Brit Hume put it during your
interview.

Please remind your colleagues that House Republicans were
damaged in 1995 because of the mishandling of the budget negotiations. Newt's
biggest mistake was not only in threatening to shut down the government and
doing so twice, but also in threatening to default on the national debt. If
the electorate had wished an expansion of child-care and Medicare programs, it
would have re-elected Clinton AND given the Democrats control of the House.
The electoral mandate can most logically and reasonably be interpreted as
instructions to the Republicans to go easier on the downsizing of government,
but to continue in that direction. Clinton campaigned on one issue,
to protect the people from the kind of assault on Big Government that they
were seeing in the 104th Congress. Oh yes, he did promise a federal program to
provide school uniforms for kiddies so those who can't afford designer jeans
will not feel intimidated by those who do. Mao jackets?

In other words,
there is no need to negotiate on any new initiative for which there is no
clear presidential mandate. Republicans can reasonably and logically assume
the voters do wish less government and lower tax rates. By the way, Bill
Archer was excellent on "Meet the Press," challenging the idea of tax
progressivity as a principle. This was one of the original concepts the
supply-siders pushed 25 years ago, but which never really caught on with the
GOP: That you do not want a system that punishes people for working,
saving and investing more. Republicans can only feel comfortable making
this argument from the production (supply) side.

My belief is that you
can categorically reject the President's initiatives and not permit any
leakage, as long as you stress the Republican desire to address the same
problems by more rapid economic expansion. If you can put together a tax bill
designed exclusively to produce non-inflationary economic expansion — no
kiddie credits as a sop to the cultural conservatives ~ you can argue that the
objective is to make it possible for men to make enough to support families,
so there is no need for two-parent families parking their kid in a care
center. The electorate will support a hard line against new federal
programs where it will not support a shredding of the safety net. If a
tax bill is sent to the President and he vetoes it on the grounds that you did
not give him his initiatives, the voters will be in a position to increase
your majorities in the House and Senate to produce an override. Knowing this,
Democratic legislators will vote to override, to keep from being pitched
out.

You were, though, wise to tell the Sunday audience that you would
look at the President's proposals carefully. Archer did the same. Whatever
screwball ideas the President proposes should be examined carefully. As long
as you are in control of the government, which is what Congress is all about,
you can be respectful to the suggestions of the minority party. If the
President had actually asked the electorate for a mandate, it would be a
different story. Because he is only in a position to protect the country from
your excesses, you can send him legislation until it finally passes over his
vetoes. I don't think he will veto any tax cuts.

You were not asked
about the mushrooming economic crisis in Asia, but that is something which
will occupy all of you in a way that could not have been anticipated in an
electoral mandate. The administration is going to be asking for another big
bag of taxpayer money for the International Monetary Fund and you should be
prepared to tell it that there will be no further funding for the IMF, as its
record does not warrant replenishment of its capital. They will attempt to
scare you with tales of Global Depression if you do not come across, of
course, but you need to tell the White House you will not stand for such
tactics. The big problem on the GOP side may be Senator Al D'Amato, chairman
of Senate Banking, who is likely to line up behind the big banks in yet
another round of corporate socialism. Fortunately, the economy is strong
enough here that the big banks can swallow loan losses in Asia and still
thrive. Yet there need be no losses if the problem is addressed correctly. On
Meet the Press, House Minority Leader Dick Gephardt was of course quick to say
we had to give the IMF everything it wants, but he made the mistake of
worrying about the tide of cheap goods that will be flowing here because of
the Asian fire sale. Jack Kemp immediately crunched him by pointing out that
Gephardt now supports the same institution that pushed the Asians into the tax
increases and currency devaluations which have caused the fire sale. Gephardt
looked like he was hit with a sledgehammer. What was he going to
say?

As Kemp said, the answer is to help the Asians appreciate their
currencies, which the IMF is in no position to do anyway. In the Mexico crisis
of 1994, the peso was finally stabilized by the use of the administration's
Exchange Stabilization Fund. The Clinton Treasury was supposed to have gone
beyond stabilization of the peso and helped Mexico appreciate its currency to
the pre-devaluation rate of 3.5, but as soon as Treasury got what it wanted,
it reneged, leaving the people of Mexico impoverished. Don't make the same
mistake twice. You are now in a position to do this right, getting a public
commitment from the President to handle this matter not through the IMF, but
through Treasury, in a way that forces the correct solution. Each of the
countries involved can appreciate their currencies by announcing targets and
withdrawing reserves from their banks. Speculators will do the rest as soon as
they see the policy begin. Unless this is done, the devaluation will
immediately shift the burden of their national debts to the backs of the Asian
people, off the backs of their governments. For the IMF to require budget
surplus in addition to the dissolution of national debt is of course
ridiculous, but this is what the IMF is all about. Your Ph.D. in economics
should come in handy here, as you will see there is no free lunch involved in
this solution. We are simply restoring the status quo
ante.

There is nothing difficult in this process. It is easy if
you execute. Don't think about how difficult it is to turn conventional wisdom
around or you will throw in the towel. The electorate put you in power because
it is hoping you will begin acting like a majority. Republicans are in a
position to make it happen because you have control of the
government. As long as you remember that you are not the minority party,
you can achieve enormous success. You can actually solve the Asian problem.
That alone will secure your place in the history of the world!